Reality Check – Employer Forwarned

The Senate version of the proposed health care overhall bill being pushed by the Democrats is slightly less obnoxious than the House Bill which passed recently. So, we decided to look at this bill to determine the financial impact it will have on XXXXXXXX XXXXXXXXXX  should it pass.
If you decide to continue offering employees a health plan, you will be limited to four plans mandated by Uncle Sam:
– 60% plan
– 70% plan
– 80% plan
– 90% plan
No more mini-med plan. No lifetime maximum benefit. Pre-existing conditions must be covered for new hires. Preventative care, including dental and vision, must be covered with no co-pay.
You can have a waiting period for new hires, however if the waiting period is 30-60 days, XXXXXXX XXXXX will be punished by paying $400 for each new hire. So, if your turnover is high, and you have a 30 day waiting period for example, you would be punished by paying $400 X number of new hires in a year = $ ?. If your waiting period is 60 -90 days, the punishment is increased to $600.
Rates have to be actuarialy set utilizing a two tier rating system. What this means is that the cost differential between an employee age 20 and an employee age 60 cannot be more than 2 to 1. Since your group’s average age is 24, your rates would be increased approximately 70% to abide by the 2 to 1 rule. 
Any employee who elects not to enroll in your group plan and is eligible for a health tax credit, XXXXXXX XXXXX will be punished by having to pay $3000 for each employee eligible for a tax credit, or $750 for all +3000 employees, whichever is less.
These are just some of the “surprises” you will find in this Senate Bill. What would be interesting, and I think would be necessary, is to drill down on the final House/Senate Bill (which will surely pass in some form) to determine the financial impact on your business. Then you will be in a position to determine how to pass that cost on to your customers. Example; suppose current health cost to XXXXXXX XXXXX is 6% of payroll. Assuming a +70% increase in rates, that would increase to 10.2% of payroll. The difference is +4.2% increase in cost.
Lastly, should Congress pass anything close to what we see now, there will be little need for insurance agents or insurance consultants. Benefits will be mandated, you will have little or no leeway to build a plan that fits your corporate philosophy. You will be at the mercy of government bureaucrats.
Several states are exploring the possiblity of opting out of the Obama plan. There may be an opt out provision, but what we see is a limited opt-out provision. The thinking here is that if states are required to participate, one of them may file a lawsuit with the Supreme Court – unconstitutional to require citizens to purchase a car, a home, a health insurance policy, etc. The fear of the Obamanites, as some think, is that such a lawsuit may prevail, and if that happens their plan to take over 1/6 of the economy may unravel. We are not too certain if this argument has legs.
We are going to keep on top of this. Once the bill passes, which we feel strongly one will in some form or fashion, we will attempt to quantify the financial impact on your business. You will then be able to adjust your pricing appropriately.

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